Posted
by
msmash
on Thursday January 05, 2017 @09:04AM
from the what's-happening dept.

An anonymous reader writes: Bitcoin is getting smashed. The cryptocurrency was down 18% to about $892 per coin as of 8:17 a.m. ET on Thursday. It is the biggest drop in two years. Earlier this week, on its first trading day of the new year, Bitcoin crossed above the $1,000 mark for the first time since 2013, but it has now tumbled below that level.

China is in a huge bubble, smart Chinese are desperate to get their capital out. Capital controls never work for long.

The 'ghost cities' in China are all owned by Chinese citizens, who traditionally love to own * real estate. In China a condo that has never been occupied is worth more that a condo that has (strange, but somewhat understandable as rents are nowhere close to mortgage payments). The average person with money in China is sitting on assets that are overvalued by a factor of at least 5. As more and more of them realize this, bitcoin pricing will become more volatile. The 'grey market international cash flow' share of bitcoin ownership (think of it as a flux though) is increasing vs the 'investor/speculator' shares.

And the second it dropped below $900, people started buying and pushed it to $975... Look up "Profit Taking" "Rebound" and "Correction" to see why this happens and how it happens in stocks and other investments all the time. Essentially, a lot of people had sell orders at $1100 that started a dip. A lot of day traders dumped when it dipped causing a big drop. But a lot had buy orders if it went below $900, and that floor caused the day traders to jump in and push it up further.

I think this is closer to the truth. It wasn't people saying "hey, the news says bitcoin is high, I should sell". It was people setting up automated buy and sell orders based on specific value amounts. The problem was that everyone seems to have picked the exact same numbers.

And the second it dropped below $900, people started buying and pushed it to $975... Look up "Profit Taking" "Rebound" and "Correction" to see why this happens and how it happens in stocks and other investments all the time. Essentially, a lot of people had sell orders at $1100 that started a dip. A lot of day traders dumped when it dipped causing a big drop. But a lot had buy orders if it went below $900, and that floor caused the day traders to jump in and push it up further.

When I first glanced at the headline I thought there was something major going on, since if Slashdot were reporting on bitcoin value it must be serious. Nope, of course not, just a correction that was bound to come sooner than later. It's still going strong, and while it will continue to be a wild ride, I can't see it really "crashing" any time soon, no matter what the OP suggests. I got back in months ago at $800ish, took profit at $975, and rebought again at $890. Big swings, as we've always seen, but not

Bitcoin is a great way to make a lot of money or lose a lot of money if you don't mind taking a gamble or being very patient. It will inevitably rise and fall like crazy.

One of the reasons that Bitcoin is (supposedly) Good is the stability in its supply, that it can't be diluted by evil government and made valueless. But since nobody is looking after it, it is vulnerable to horrible fluxations way worse than anything than properly managed fiat currency does. Bitcoin as a means of transfer, fine, but Bitcoin as a value store, terrrrriiible.

Only if you look at it in very short terms. Over long term it is actually quite stable other then occasional speculative peaks which are easy to avoid. You could see this one coming at Christmas. And today (If you were watching) was the bitcoin sale at $900.

Only if you look at it in very short terms. Over long term it is actually quite stable other then occasional speculative peaks which are easy to avoid. You could see this one coming at Christmas. And today (If you were watching) was the bitcoin sale at $900.

For pretend money, Bitcoin is not so unstable. Compared to real money, it is extremely unstable. It is only ideological blinkers that prevent people from seeing it that way.

I really think that a lot of folks had just said "oh 1k maybe time to "cash in"...

I bet it rebounds and will go through some oscillations every time it crosses 1k until folks get used to the idea that it can go to/higher than 1k then it will creep up and probably take a dip at 1.5k and/or 2k

I bet it rebounds and will go through some oscillations every time it crosses 1k until folks get used to the idea that it can go to/higher than 1k then it will creep up and probably take a dip at 1.5k and/or 2k

Well a short sale is pretty risky for most investors. Unlimited losses are kind of scary. If you want to short something and you're not highly experienced, look to buy puts. At least that keeps a lid on maximum losses.

It always amused me that the first thing this brave new world of decentralised control recreated was....currency and commodity speculation. They're being introduced to the idea of support and resistance levels, all standard stuff. The difference with crypto is that the volatility resulting from these swings is enormous.

The difference with crypto is that the volatility resulting from these swings is enormous.

That's not a "crypto" difference; it's a normal characteristic of commodities that typically trade in low volumes. If bitcoins were being bought and sold in large quantities by many big institutional investors, with lots of focus on identifying and exploiting arbitrage opportunities, the volatility would be reduced.

That is only going to change when a big (evil) bank with cozy connections to all those big bad gov'ts decide to weigh in and help Bitcoin succeed. So far, one of the surest ways to lose you Bitcoin is to trust it to a Bitcoin exchange, where it will likely disappear with all the earmarks of an inside job. Mtgox is the obvious example, but it was far from the first and not the last.

This is the most likely scenario. The market is a beautiful thing...probably several big whales decided to cash out, meaning the supply spiked causing the price to go down. The ignorance of looking at a 24 hour 17% drop vs a 300% 12 month raise is astounding. I would think most people who understand financial markets would not be this ignorant to call this a "crash"

The ignorance of looking at a 24 hour 17% drop vs a 300% 12 month raise is astounding. I would think most people who understand financial markets would not be this ignorant to call this a "crash"

For someone accusing others of being "ignorant" of financial markets, you sure have a funny way of reporting statistics. You do realize that IF you had a 300% gain, then a 75% loss would completely erase it, right? When talking about percentage gains this large, it usually helps to talk in terms of actual numerical gains or at least how much of a loss you have COMPARED TO the gain (in real numbers).

According to the first search hit I found, a year ago Bitcoin was at around $432. Yesterday, that site reported it as $1135. That's a 162% gain, not 300%. As I write this, Bitcoin is around $950. That's is indeed somewhere around a 16-17% loss in 24 hours.

But, from a clearer perspective on how we relate those two percentages, the gain for the past year was about $700. The overnight loss is so far around $185. In other words, Bitcoin lost OVER A QUARTER OF ITS YEARLY GAIN OVERNIGHT.

Is it back where it was a year ago? No. But trying to pretend that this is a minimal loss by juxtaposing numbers like 300 and 17 is disingenuous at best.

Should "people who understand financial markets" be worried at such a turn of events? Probably not. Because people who understand financial markets know that Bitcoin is right now a really bizarre investment subject to the whims of "pump and dump" investors, and there's still a lot of value locked up in some early investors who could completely crash the market if they decided to jump ship.

So, anyone "who understands financial markets" probably expects Bitcoin to be this volatile -- probably even more so. Whether a person "who understands financial markets" would consider Bitcoin a sound investment is a different question.

All investment is risk, but that's different from what people normally mean by gamble. Sure any investment bears risks such as global nuclear war, government/societal collapse, alien invasion, and so on, but the unexpected death of the investor is a higher risk than those sorts of things. Any investment is a risk somewhere on the scale between short-term US treasuries, and loaning money to a heroin addict, but that doesn't mean all risks are similar.

Also, volatility and risk are different things. At this point for BTC, I'd be much more concerned about its volatility than the risk it would go to 0, making it speculative regardless.

The problem with Bitcoin as a speculative investment is the lack of liquidity. Unlike other markets it is not easy to buy and sell large amounts at will, in addition there seems to be no put and call options available. As a result, while it is a highly speculative investment it is not an easy one to actually invest in as a speculator; unless you are just doing trivial amounts of money.

At work I get dollars for labor, which can be used to procure goods and services. I could also use my computer sitting at home to do nothing and save electricity, fold proteins for the good of mankind, or generate numbers that for some reason can be used to procure goods and services? Usually when you get value for no reason it is part of a Ponzi scheme. Does Bitcoin hold any value because it also seems to be a decent way to launder money?

At work I get dollars for labor, which can be used to procure goods and services. I could also use my computer sitting at home to do nothing and save electricity, fold proteins for the good of mankind, or generate numbers that for some reason can be used to procure goods and services?

Instead of welfare, we should just give all the unemployed computers for Bitcoin mining.

I suppose it is mostly just on the strength of the government... not that gold is any less silly... come to think of it, though, since to use for most important purposes, like buying food or housing, one must trade the Bitcons for dollars first, perhaps I need to think of Bitcoin more like bartering home crafts. If I imagine a 3D printer whirring away instead of a CPU it makes more sense even though it comes down to the same thing.

Fiat currency does have one advantage over bitcoin: It is almost always legal tender for paying current and past-due domestic debts, including tax debts.

There are of couse exceptions - minor coinage is typically legal tender for only small amounts, a particular bank note can by de-monitized like India just did, an entire currency can be scrapped as Zimbabwe did a few years ago, and some highly-regulated countries have government-run "hard currency stores" for tourists that won't accept local currency (e.g.

Fiat currency does have one advantage over bitcoin: It is almost always legal tender for paying current and past-due domestic debts, including tax debts.

And there's this: If my house payment is $1000, it'll be $1000 in a fiat currency like US dollars, period.

But how much will that be in Bitcoin today or tomorrow or next week? Maybe it'll be 1 Bitcoin, or maybe it'll be 1.5 Bitcoins, and so on. It's similar to gold or silver or any variable commodity in that the "value" can vary widely from day to day. But my house payment will be $1000 US dollars regardless of the price of gold or silver or bitcoin or whatever.

What does it matter if that's 1 BTC or 1.5 BTC? It's still $1000 of BTC. Bitcoin is for making payments, not for storing money or fixing your prices against (you want a currency for those, not a payment network).

Yeah: you're trying to use Bitcoin to store value. Bitcoin is for moving your savings around, not for storing them. You don't keep 20 BTC in your wallet, you keep $20k in it and then use the Bitcoin network to move $1k per payment. It makes no odds whether that's 1 BTC or 2 BTC at the time of payment.

True, but as a portion of my payment all those things total just under 20%. Even if taxes went up 20%, and people would be up in arms about that, it's still less than a 4% change in my monthly payment. These BC fluctuations are a whole different ball game.

The loan-payout portion is fixed if it's a fixed-rate home loan. The insurance, property taxes, neighborhood association fees, and other costs most people think about when they talk about a "house payment" are typically variable.

Yes, it's a fixed-rate loan like the majority of home loans. But, even if taxes and insurance and "other costs" (whatever those unspecified things may be) went up drastically, my house payment wouldn't go up to, say, $2000 a month.

But if I had all my money in Bitcoin, who knows what it would be? Maybe my payment would be 0.75 Bitcoin, or maybe it would be 3 Bitcoins. Maybe it would be 10 bitcoins.

And by the way, even if taxes and insurance and "other costs" went up, that rise in cost would still have to be

You know what traditional currency like the Dollar was really missing? All the excitement of the random wild value fluctuations inherent in a dot-com stock! I for one find it tedious and boring to walk up to the checkout line in a retailer or grocery store already knowing that I have sufficient funds to pay for my purchase. Yawn.

I've always seen bitcoin as I've seen Pirate Bay. Bitcoins biggest selling point afaik was that you could pay anonymously, and anonymous pay is good for the black/dark marked. For the same reason, I can't just walk down to my local bank and say "1$ bitcoin, please!".

The dilemma starts when you're selling something, and want the money into normal money you can actually pay your utility bills with.

Also, the bitcoin to me also seem like the "poor man's fake gold reserve", if you believe it is worth something, then it is worth what you pay, so essentially the value of the bitcoin could go fictively up and down all the time, and if you sell it at the right time (if anyone is willing to buy when the value is high), then what do you do with the money? In Sweden you'd have to prove where the money comes from if it is a sum over 10K SEK. Otherwise the bank wont heed it and say no to your money because it doesn't come from any known source to them. They claim this is to prevent drug trafficing, but we (the citizens) know all too well that this is a plot from the gov. to control all the money and tax even already taxed second-hand sales, whatever you sell - we want a cut.

So all regular citizens really can do - is to lean back and watch the online show called "Bitcoin raises/loses value/dives/jumps" whatever....

Bitcoin isn't anonymous, everyone can see the full transaction history for your ID number. They just can't go from ID number to Name. But if you do anything like even post a bitcoin link on a web page, then you've provided enough information to find out your transaction history.

Just because that is your possibility in the place you live, doesn't mean it is possible for everyone around. And if all that you can resort to is name calling to strengthen your argument, then I'm not the idiot.

I get a little board of "Bitcoin is rocketing" or "Bitcoin is crashing" headlines. Niether is true, and never was.
Bitcoin is in effect a (virtual) commodity, but with a much lower cap than others such as gold. This means that small things, like Brexit, or the fall of the Chinese Yuan, or the discontinuation of Indian cash bank notes and such will effect the price in a major way, with the inevitable exageration of the market by speculators, followed by the resulting corrections when these minor bubbles b

I don't expect quantum computing to make an impact in the next 20 years, even with a gigantic breakthrough. I could be wrong, and I hope I am, but the world record for (proper) quantum factoring is still 21=3*7, right? And that was 2012. The previous record of 15=3*5 had been standing since the 2001. And the interval between advances doesn't seem, to me, to be getting any shorter. To put it another way, the difficulties in scaling the systems to more qubits seem to be increasing at least as fast as we

If you are a merchant that takes bitcoin but sells it for local currency by the end of the day, you need intra-day stability.

If you are holding it as a currency for days or weeks at a time, you need short-term stability.

If you are holding it as a currency for longer, you need medium- or long-term stability.

On the other hand, if you are buying it as an investment, like a stock, or as a speculative "investment" (aka "gambling") then in addition to a long-term upward trend, you want instability so you can benefit from dollar-cost averaging as you buy and "dollar cost averaging in reverse" - selling a fixed amount of BC every day - when you eventually sell.

Of course, if you are a day trader who depends on intra-day changes in value, you want short-term instability and either a knack for timing the market right or a dose of good luck to keep from coming out in the red that day.

The shady exchanges are the problem with all of the cryptocurrencies. The biggest asset would be a very easy way to facilitate a micropayment via bitcoin; the current exchange mechanisms make this hard or impossible for average folks.

Ultimately a blockchain (and the resulting currency) will need to be backed by a nation state to have validity. Political notions aside, that's when things will get interesting. If Bitcoin ever gained any traction it will be put down by force.

While there are currency speculators, "investing" in a currency is generally not a sensible thing to do. You don't keep wealth in cash, which produces nothing, you invest it in something productive that yields a return.

Bitcoin, like money, is a short term means for conducting business transactions, nothing more.

My bet is that someone decided to cash out a lot of bitcoins (up to tens of thousands) which swayed the market however it's already recovering - as of this moment bitcoin is trading at $985 at BitMex (the largest USD bitcoin exchange).

As for the Chinese yuan getting stronger - I call it BS. It hasn't become 10% more valuable, more like 1% at the most, yet bitcoin has suddenly lost ~30% (~1100->~880) of its value in a matter of a an hour(!). Nope. These two events seem to be related but one didn't cause

It's been already noted on several occasions that very large bitcoin purchases/sell outs significantly alter bitcoin's price because people still don't believe in it like they for instance trust fiat money, so whenever they see major fluctuations they start to panic and exacerbate whatever trend is currently in effect. This explains almost every time when bitcoin has lost/gain its value.

Bitcoin is a currency of pure faith (there's no bank/government or any financial entity behind it) and only when a numb

Well, it's not a matter of faith one way or the other, it's a matter of control.

Money is always money because AND ONLY because people have faith in it. That's just as true for dollars as it is for bitcoins. The difference is that bitcoins are designed to have no central authority. This is a huge advantage for people who have reason to distrust central authorities (e.g. people trading in contraband, people who trust authorities per se).

On the other hand, not having a central authority means there is nobody

RIght now the main things fueling BitCoin's value is India's deflation currency correction and worries about Trump's administration. Within the year I look for both issues to stabilize. BitCoin will drop down around $350 / coin.

As long as Satoshi still controls the first million bitcoins I fear it cannot be taken seriously as the creator has the power to single handily effect the market. No bank or government is going to back something where 1 individual has set themselves up with such disruptive power.

Welcome to currency trading. The reason your grandparents did not bet the farm on currency is because of the wild swings. Somebody gains big and somebody loses big here. These sort of swings in currency are exactly how George Soros made his fortunes. I do not think the current swing indicates good or bad days ahead for BitCoin. It only indicates that it is being used for huge profits by some.

Here is a little explanation of what just happened: One of the biggest emerging Bitcoin markets is in China. China's Yuan has been weak and even a small percentage of investors moving their Yuan investments in and out of Bitcoin can cause the market to fluctuate greatly. China's Yuan is much bigger than Bitcoin, so relatively small waves in China really rock the boats in the Bitcoin world. There was a spike in Yuan value, and some investors assumed better days ahead for China and cashed out bitcoins for Yuan. As you can see from the current charts, investors now saw cheap Bitcoin and are buying those again.

Well, the article's goal is either to spike Bitcoin further or to try and delay the fall because they are not done dumping it.

I cannot tell which one because TFA thinks that they are important enough to make me turn off ad-blocker or convince me to get ad-light(??) access for less money. But nowdays even with ad blocker, some websites manage to play video with obnoxious sound or freeze the browser, so I am too afraid to turn it off and see the real web.

Bitcoin is off the lowest levels of its plunge on Thursday, which was the worst in two years.

The cryptocurrency is down 13% to $985.68 per coin as of 11:10 a.m. ET on Thursday. It earlier fell by about 20%.

Earlier this week, on its first trading day of the new year, bitcoin crossed above the $1,000 mark for the first time since 2013, but it has now tumbled below that level.

From the end of September through Wednesday - just before the plunge - bitcoin gained nearly 100%. It was supported by renewed interest from China, where money rushed out of the country as its currency, the yuan, continued to weaken.

But on Thursday the yuan witnessed its biggest two-day rise since record keeping began in 2010. This happened amid the government's efforts to stop outflows from the country and after overnight borrowing costs in Hong Kong surged to a record as high as 100%. That squeezed investors who had bet that the currency would fall.

The yuan's rise is also pressuring the US dollar, which fell against other major currencies.

I understand that BC is not a "widely accepted" currency and odds are that you have to cash-in eventually, but the point of Bitcoin is to become an alternate way to ease the trade of goods and services, and it should be used like that. Trying to convert it into "real" money misses the point completely. I think that if people have bitcoins, they should use them only to replace conventional currency in their transactions, not to try to convert them.

It's not a usable currency because one of the points of currency is a value store - a way of 'keeping score'. To do that it must have a relatively stable value, which is demonstrably doesn't. Bitcoin is a gambling mechanism, and a way of hiding transactions, but it is not a usable currency.

It's a payment network. It wasn't designed as a replacement to the dollar but rather as a replacement to Paypal. As such it shouldn't be too surprising that it doesn't make a good currency; it's just not designed for that.

It's a payment network. It wasn't designed as a replacement to the dollar but rather as a replacement to Paypal. As such it shouldn't be too surprising that it doesn't make a good currency; it's just not designed for that.

It's a shame that it's not that good at that either, transaction confirmation times often are faaar to long.